S&P Global Ratings has moved its outlook on Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) to positive from stable and maintained the company’s long-term issuer credit rating at AA-. The agency also affirmed AA- issue ratings on notes issued by TSMC Global Ltd. and TSMC Arizona Corp., which are guaranteed by the parent company.
The revision to a positive outlook reflects what S&P described as TSMC’s reinforced leadership in the global semiconductor foundry sector. The agency highlighted rising technology and scale barriers that are making it more difficult for rivals to compete at the most advanced process nodes.
S&P noted that in 2025 TSMC accounted for roughly 72% of total revenue across 10 leading global foundry service providers, with a revenue scale about 8.7 times larger than its nearest competitor. By comparison, the company’s share was about 54.6% in 2021 and its revenue scale was roughly 2.9 times that of the closest peer at the time. That increase in concentration was linked to TSMC’s strength in foundry and packaging services for advanced chips used in high-performance computing and mobile communications, which the ratings firm said materially boosted the company’s market share.
On cash flow and capital deployment, S&P expects TSMC to produce free operating cash flow of NT$1.6 trillion in 2026 and NT$1.9 trillion in 2027, projections that account for higher capital expenditure and elevated cash dividend payments. The company raised its capital expenditure budget for 2026 to a range of $52 billion to $56 billion, up from about $41 billion in 2025.
Dividends were sizable in 2025, totaling NT$467 billion, and S&P states they are expected to increase by around 30% annually in 2026. Despite these cash outlays and the heavier investment plan, the ratings agency sees the company retaining strong free operating cash flow in the near term.
S&P cited intense demand for advanced chips used in artificial intelligence applications and cloud infrastructure that, as of mid-2026, exceeded TSMC’s available manufacturing capacity. The agency said this demand environment provides order visibility and gives TSMC improved pricing power through 2026 and 2027.
According to S&P’s estimates, revenue from AI processors - including GPUs, AI accelerators and CPUs - represented 22% to 25% of TSMC’s total revenue in 2025. High-performance computing more broadly accounted for 58% of total revenue in 2025, up from 43% in 2023, underscoring the shift in the company’s revenue mix toward compute-intensive chips.
Geographically, TSMC’s U.S. expansion has progressed, with production ramping at its first Arizona fabrication plant and achieving comparable yield rates. The company is also constructing multiple fabs in Japan and Europe and has signaled that once these projects are complete, it intends to locate about 30% of its 2nm and more advanced capacity in Arizona. That said, TSMC still had approximately 90% of its production capacity in Taiwan at the end of 2025.
S&P’s actions leave the issuer rating unchanged at AA- while assigning a positive outlook, reflecting the agency’s view that the company’s market position and the financial profile underpin potential rating upside if current trends persist.